Google’s LSA Update (February 2024): A Fast Track to Ad Spend Disaster?

Over the last couple of days Google rolled out its latest update for Local Services Ads (LSA) and it has many users in an uproar. 

As part of the company’s new branded local services ads called Direct Business Search, Google has started showing local services ads on branded terms. Anyone that is running LSAs are automatically opted-in to this new campaign.

Luckily you can opt-out, and you’re probably going to want to do so after we go through the math below. All I can say is, don’t drag your feet on this one, make a decision whether you want to test this new functionality or immediately turn it off. Let’s take a closer look.

Google LSAs Before The Direct Business Search Launch

Prior to this latest Google release, Local Services Ads were designed to show up on non-branded terms related to the categories and services you’ve selected in your profile. So if you are a garage door company in Los Angeles, your LSA ad would show when someone searches for a term such as “los angeles garage door installation”.

Google LSAs After The Direct Business Search Launch

Under this new update, LSAs will now start showing on branded terms as well, i.e. your company name. Let’s take a look at how this appears now:

Precision Garage Doors is running LSAs and likely a branded Google Ads campaign targeted for their brand name “Precision Garage Doors”. The company occupies the majority of top page real estate for its brand with an LSA in the very top position, a Google PPC ad in the 3rd position, as well as the first organic position.

Direct Business Search: The True Cost of Not Opting Out 

From a cost perspective we know that clicks on the organic listing are essentially free. The cost of a click on the PPC ad on the company’s branded name is likely super cheap, for simplicity let’s say Precision pays $1 for those clicks and converts 10% of those clicks into qualified leads. That would yield a CPL of $10.

With LSAs now occupying the very top of the page, customers who search for Precision Garage Doors are more prone to click on that ad, and if so, and consequently call or submit their information, Precision will be charged whatever rate they are paying for LSAs (definitely more than $10!). Letting this go unsupervised for too long could severely hit the company’s Return on Ad Spend (ROAS).

Opting out of Direct Business Search would effectively remove the LSA ad, leading customers that are explicitly looking for Precision Garage Doors to likely click on the less expensive PPC ad or the free organic listing.

LSA users can opt-out of Direct Business Search by going to settings, and turning off the Direct business search toggle, as highlighted in the screenshot below:

So what do you think?

Are you going to test the new Direct Business Search functionality or are you going to opt-out?

Let me know your thoughts below.

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Philip A. Saunders

Mr. Saunders serves as Mesa’s Vice President of Marketing, bringing with him a wealth of experience in strategic marketing and operations. In this role, Mr. Saunders is responsible for overseeing all marketing activities, utilizing a blend of traditional and digital strategies to enhance brand presence and profitability, managing a multi-million dollar marketing budget across various media platforms, and leading the continued implementation of CRM systems to streamline customer engagement and drive business growth.